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The Hash Insider: Week with signals of doubt

The Hash Insider

The NCI closed Sunday (8/7/22) 1.3% below last week’s closing. The index’s performance was influenced by ether (ETH), up 0.4%, while bitcoin (BTC) fell 2.1%. 

In the wake of the best month for crypto markets in 2022, asset prices remained mostly stable in the first week of August. Bitcoin’s 22% price gain in July has weary investors wondering if four consecutive green weekly candles represent the start of another bull market or just a lengthy bear rally. Reduced trading volumes in the back half of the week seem to substantiate this uncertainty. 

Unsurprisingly, macro conditions—especially US inflation figures and the Fed’s consequent response—are likely to be a determining factor that shapes bitcoin’s price trajectory in the remaining back half of 2022. 

Wednesday’s Consumer Price Index and Thursday’s Producer Price Index readings may shed some light on the issue and help investors gauge if inflationary pressure is in fact easing or whether the Fed will need to keep its proverbial foot firmly pressed on the rate hike pedal.

Ethereum's quiet week was also influenced by the wait-and-see approach on the macro front, but was more so a reflection of uncertainties surrounding The Merge. Ethereum’s 59% price increase in July has investors wondering to what extent the timing of The Merge has been priced in. If Ethereum developer Tim Beiko’s timeline remains accurate, the merge of a final testnet, due to occur this Thursday, will represent an important test of investor appetite.

The crypto market started the week with no clear direction, with bitcoin prices bouncing between thousand-dollar highs and lows. Meanwhile, Ethereum’s 5% price drop on Monday is likely the result of investors taking gains after July’s stellar results.

Beyond that, market volatility in the early week seemed to be driven by US Speaker of the House Nancy Pelosi’s visit to Taiwan and the consequent threat of rising Sino-American tensions. Asian stock markets opened to steep declines on Tuesday morning, as Chinese officials stepped up their heated redirect before and after Pelosí’s plane touched down on the former Chinese province.

On Tuesday afternoon, social media posts about missing SOL wallet funds began to trickle out. It was later discovered that the affected addresses were all associated with Slope mobile wallet applications. According to the Solana Foundation, private key information was unintentionally leaked by the wallet developer to an application monitoring service. 

News of the hack caused the smart contract platform’s token price to drop by 10% late into Tuesday night, but the revelation that the Solana blockchain had not been compromised seemed to stem losses relatively quickly. To understand why Hashdex investors should remain unfettered by this recent event, consider reading our response to the event.

By Wednesday morning, prices were trending back up, only to come back down later in the day. On Thursday, bitcoin’s trading volume began to taper, but bitcoin prices registered another thousand-dollar bounce back up to nearly $23,500 by Friday morning. 

That upward movement was promptly interrupted by a US Bureau of Labor Statistics report that showed that job creation figures for July greatly exceeded market expectations—an indicator that suggests there is still plenty of room for hawkish Fed intervention that would cool the job market to rein in inflation. 

On Thursday, Coinbase announced a partnership with Blackrock, the world’s largest asset manager. Institutional investors with accounts on both Coinbase Prime and Blackrock's Aladdin will gain access to direct exposure to digital assets.

On Friday, prices registered a partial recovery into an uneventful weekend with reduced volatility. 



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